Chrysler Group LLC, majority-owned by Italy's
), decided to freeze its U.S. pension plans for nearly 8,000 U.S.
salaried employees at the end of the year. The freeze will be
applied to employees joined before Dec 31, 2004.
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Chrysler stated that the decision has been taken mainly to comply
with U.S. tax regulations. All the affected employees will be
shifted to a defined contribution plan from the traditional
pension plan, which guarantee a specific payment to retirees. The
company's pension plans were underfunded by $8.9 billion at the
end of last year.
However, Chrysler revealed that the employees will get all the
benefits accrued through Dec 31 this year. It will also allow
them to access the entire amount of their benefits earlier at 58
years of age instead of 62.
Chrysler is not an exception as far as the termination of pension
plan is concerned. Last year,
General Motors Company
) also suspended traditional pension benefits for 19,000 salaried
workers hired before 2001.
A few days back, Chrysler hit the headlines when it refused to
recall about 2.7 million units of its Jeep Grand Cherokee from
1993 through 2004 and Jeep Liberty from 2002 through 2007 model
years even when National Highway Traffic Safety Administration
(NHTSA) sent a letter asking the company for a voluntarily
Chrysler denied on the ground that the letter is based on
"incomplete analysis of the underlying data" and the vehicles are
completely safe. The company revealed that it has met all federal
safety standards when the vehicles were manufactured; as a
result, they are "among the safest vehicles of their era."
NHTSA started investigating on the issue in Aug 2010 at the
request of an advocacy group based in Washington, D.C. The agency
found that if hit from the rear, Jeeps' fuel tanks can leak fuel
and cause fires if there is an ignition source.
In fact, the agency inferred that the older Grand Cherokees and
Libertys have fatal crash rates that are about twofold compared
with similar vehicles, such as General Motor's Chevrolet S10
) 4Runner, Isuzu Rodeo, Isuzu Trooper, Mitsubishi Montero, Suzuki
Sidekick and Suzuki XL-7.
However, Chrysler concluded that it received low number reports
of rear-impact crashes over the last 30 years caused by fire or a
fuel leak in the affected Jeeps. Besides, retrofitting the older
Jeeps with repositioned tanks would be time consuming and costly.
In the first quarter of 2013, Chrysler's profits tumbled nearly
65% to $166 million from $473 million in the year-ago quarter.
The company's results were negatively affected by lower vehicle
shipments of key product launches, particularly the 2013 Ram
Heavy Duty trucks and the 2014 Jeep Grand Cherokee, as well as
due to preparation for the second-quarter production launch of
the all-new 2014 Jeep Cherokee.